Lack Of Credit Will Threaten Car Sales, But Grants Boost Output

In one of the most significant moves in Hungary's auto sector in recent years, the Hungarian government granted state subsidies of HUF11.2bn (US$60.5mn) and HUF5.5bn (US$29.7mn) to the local operations of Audi and Opel respectively in April 2011, in an attempt to push the country's automotive manufacturing closer to its eastern European peers. The government is hoping that the subsidies -- which will complement a combined EUR1.4bn (US$1.99bn) investment from the two carmakers -- will help it increase its production capacity to a level close to that of Poland. Total vehicle production in Hungary increased an impressive 25.47% y-o-y, to 229,040 units, in 2010 and BMI expects carmakers to increase this further by at least 10% y-o-y, to 252,375 units, in 2011, thanks to the Audi and Opel investments.

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